Tag Archives: Climate Change

Value(s) by Mark Carney: Chapter 12 Breaking the Tragedy of the Horizon: Key Takeaways / Analysis / Citations

Chapter 12 Breaking the Tragedy of the Horizon

Key Takeaways

One of James Carville’s Clinton ‘92 campaign slogans was “It’s the economy, stupid”. For Carney is “it’s the transition, stupid!” If you can get private financial institutions to truly back the transition then you can contribute to being a good custodian for generations to come. Carney’s work for Glasgow COP26 centres on organizing the plumbing for these financial institutions. In chapter 15, “Investing for Values” Carney explored this further. In this chapter, Carney argues that there are three technologies: 1) engineering, 2) political and 3) financial that need to be marshalled to address climate change.

Engineering Technology

Driving Scale and Innovation: There will need to be major improvements to these hard to change sectors. Very hard to outlaw fossil fuels (ie. decarbonize) which are cheap and do not have a large upfront CAPEX:

  • Zero-carbon economy, electricity today is 20% green and is projected to be 60% by 2060;
  • Energy creation needs to be moved to a 90% market share with a mix of wind and solar. To what extent do we electrify everything and do it with green electricity depends on storage and loading challenges since solar and wind are intermittent. And we need to look at power efficiency in products we use;
  • Global electricity has to increase 5x by 2050 and needs to be generated by renewables according to Carney;
  • In the UK, off-shore wind farms were expected to generate £140/MWh by 2025 back in 2013 but then in 2014, they revised the number to £107/MWh, in 2016 they revised it down to £57/MWh; In the US, $59/MWh is the cost of coal and now onshore wind-farms are at $26/MWh and solar is $37/MWh….cheaper then coal!

Electric Vehicles (EV)

  • Hard to reduce dependency on fossil fuels (again, the euphemism is “decarbonize”);
  •  Use hydrogen for public transport;
  • Tax breaks for EV;
  • Build the infrastructure for electrical and hybrid vehicles;
  • Car companies build vehicles in 3 year cycles from planning to off the factory floor so planning for more EV now is critical, even if batteries and charging stations are a problem;
  • EV is not appropriate for long-haul trucks according to Carney;

Aviation and Shipping

  • Going to be very challenging to reduce dependence on fossil fuels (i.e. decarbonize);
  • Nothing is currently commercially viable according to Carney;
  • The cost of not using fossil fuels is $115 – $230 USD per ton in aviation and $150 – $350 USD per ton in shipping;

Industrial Sectors

Currently responsible for 32% or 17 GtCO2e annually, cement manufacturing, plastic, aluminum, chemical, fashion, furniture and home appliances. The consumption of energy is massive;

  • A lot of the green technology does not really exist yet;
  • There are four ways to reduce: use hydrogen (the product being H2O), electrifying processes, using biomass and carbon capture technology.
  • Carney places a lot of reliance on carbon capture and sequestration at the point of production which involved pumping CO2 emissions into a saline solution deep underground, which is theoretical since the cost of pumping CO2 under every factory around the world has not been fully explored or whether there would be a centralized CO2 pumping station for a given geography;
  • Carbon capture, use and storage (CCUS) are currently about 1% of renewable investments so this is not a hot market;
  • Direct air carbon capture and storage (DACCS) involves sucking CO2 out of the sky where CO2 is much more diffuse then at the point of production, and therefore the economics right now are between $40 – $400/ton if extrapolated from the small test plants currently testing this technology.
Illustration and Painting

Political Technology

Setting the Right Goals. Carney argues that we need to understand the consequences of our preferences. But he also wants to convince you that his preferences are the best and you should follow him:

  • SDGs He isn’t talking about new means of engagement with the polity but rather focuses on the fact that nations will fall short by the end of the century, hence the need for Sustainable Development Goals (SDGs) which are part of the UN’s collaborative framework. There are 17 goals with 169 targets as part of the SDGs.  
  • Nationally Determined Contributions (NDCs) are determined by each country and easily fall victim of the tragedy of the commons. At the Paris COP 15, the target that was agreed to was actually 2.8 degrees Celsius above pre-industrial levels by the end of the century.
  • Greta Thunberg and the societal response: Carney was impressed by her. He showed her the Bank of England’s gold reserves. At the UN Climate Action Summit in September 2019….
  • Thunberg said “You have stolen my dreams and my childhood with your empty words and yet I’m one of the lucky ones. People are suffering. People are dying. Entire ecosystems are collapsing. We are in the beginning of a mass extinction and all you can talk about is money and fairytales of eternal economic growth. How dare you!….We will not let you get away with this. Right here, right now is where we draw the line. The world is waking up and change is coming, whether you like it or not.
  • There was a Global Climate Strike in 2019 with 7.6 million people in attendance in 185 countries…the media struggled to tall a compelling narrative, but the 6th Mass Extinction is coming according to Carney.
  • Carney argues that revolutions happen abruptly as Cass Sunstein argues, when a tipping point is met, when it becomes socially acceptable (like wearing masks for example).
  • Values depend on consumer focuses. 

Financial Technology to Ensure That Every Financial Decision Takes Climate Change Into Account

Carney argues that companies must take the race to net-zero seriously. For Carney, the financial system needs to take climate change into account, because that’s where the smart money is headed already. Firms can report their own climate disclosures. COP 26 in Glasgow is going to focus on the financial approach. There is money to be made in the transition. And Mark Carney argues that the smart money is turning green.

  • Harnessing the power of economics to effect change is the most sensible force for good, in Carney’s eyes.
  • Carney points out that the amount of money needed for the low-carbon shift is about $3.5 trillion in the energy sector per year and twice the rate currently invested in the energy sector….
  • Climate-resilient systems are needed at a cost of $90 trillion;
  • Carney argues that the private sector is more then money, we need their innovative drive that is incentivized towards net-zero;

Carney’s 3Rs, these are the three areas needed to make this work: reporting, risk, returns

Reporting: TCFD network: a solution by the market for the market which Carney forcefully argued didn’t work in the 2008 financial crisis….at any rate, their total assets under management is over $170 trillion which includes the largest banks, pension funds asset managers and insurers. The largest AUMs are asking to disclose their carbon footprint in line with the TCFD.

The metrics used are

  • Disclosure of risk, governance and strategy for climate change;
  • Consistent metrics across sectors;
  • Scenario analysis typical in financial modelling and equity research.

The disclosures cannot be static! They should be dynamic such that they reveal financial risks/opportunities. Ask the company to explain how they will reach net zero….

Regulatory Reporting

financial regulators input climate-related financial reporting in their roles.

  1. At the Bank of England, Carney says the Prudential Supervisory Authority are a division of the bank with advice on how insurers should address climate change.
  2. Make the TCFD reporting mandatory at the Federal/National level! IFRS and IOSOCO (which regulate securities) have to agree to make reporting standardized.

 Risk Management

As mentioned in chapter 11, there are physical and transition risks. Climate change differs from most other risks in that:

  • Climate change is unprecedented as they have not fully happened yet;
  • Climate change is massively impactful in every country and globally;
  • Climate change is foreseeable right now using the scientific method;
  • Climate change requires action today for horizons in the future that we cannot be predict accurately.

The Bank of England has stress-tested the UK financial system for various climate pathways, scenarios. Climate stress tests about engaging the developers of the model in the contingencies and factors at play.

Returns

The creation of green and transition bonds is an important catalyst. Carney believes that helping companies moving from brown to green is a consultative practice. The typical best plans are as follows:

  1. Defining a net-zero objective based on scope 1 (all direct emissions: fuel combustion etc), scope 2 (indirect emissions: electricity purchases) and scope 3 emissions (all other indirect emissions: end products).
  2. Outlining clear milestones and metrics for senior management;
  3. Board of Directors level governance;
  4. Executive compensation based on meeting these metrics……

Green bonds will not be sufficient to pay for the green future. Value will be in identifying the transition. ESG are focused on the s and the g. Investor should be able to calculate the e net present value. “We need 50 shades of green.” (325, Value(s)). Needs to be able to get a sense of how serious a given company is at the senior management level. Embedding metrics in the motivation. The efficacy of transition plans. 

  • Mark Carney says the UK should lead the climate change strategy in Glasgow….hence he is advising Boris Johnson.
  • Decarbonization is going to be a financially viable source of investment; if you are pulling carbon out of the process then the investment will come to you as an additional value proposition.
  • Buying offsets is opaque and only 98 million tons of CO2 were traded at a total market value at $295 million, there is no central market. There are no uniform carbon credits and there is a lot of friction so Carney argues for standardization…
  • The cost of the green tech is high for developing countries but it makes sense to provide that do developing countries as a value added services….how to capture that value once the developing country firm has that technology is not so clear.
  • Climate policies suffer that same challenge that central banks deal with: the temptation to lower interest rates over long-term stability of inflation. We want to prevent short-termism in finance and now on climate.
  • Short term costs are hard for politicians, there is a lack of credibility. 
  • Political parties need to get broad support across the spectrum. 
  • Specific climate polities should be looking at the economics. More transparent tracking of climate policies.
  • Governments should have sustainable growth committees. Carney wants to provide tools for the Bank of Canada and England decision making and targets. The idea is that market will allocate capital and then break the tragedy of the horizon. 
  • Continued growth is not a fairy tale as Thunberg argued.
  • Policies should be focused on technological innovation.
  • Clear and consistent communications.
  • More likely that investment and returns will be made clear.
  • Policy makers and future costs of doing business need to be calculated and part of the solution. 
Introduction: Humanity Distilled Chapter 1 Objective Value
 Chapter 2 Subjective Value Chapter 3 Money & Gold
 Chapter 4 Magna Carta  Chapter 5 Future of Money
 Chapter 6 Market Society Chapter 7 Financial Crisis
 Chapter 8 Safer FinanceChapter 9 Covid Crisis
 Chapter 10 Covid Recovery Chapter 11 Climate Crisis
 Chapter 12 Climate Horizon Chapter 13 Your Values
 Chapter 14 Values in Companies Chapter 15 ESG
  

Analysis of Part 2 Chapter 12

  • Not clear that the private sector would want to take on the opportunity to meet net-zero BEFORE a large global catastrophe that is clearly caused by human-made climate change such that customers demand either the private sector have targets in place or the public sector enforces such practices. It will be a train-wreck to check every single companies manufacturing to ensure they have the carbon capture pipes operating properly. It is so easy to pollute. The fines must mark the cost of violating the rules far more prominent.
  • Ironically, what caused the financial crisis are the individual actors being disassociated with the system level. What Carney hopes is that this be flipped around with climate change. Suddenly, decisions should be made at the system level with a simple boiled down abstraction of 42 +/- 3 GigaTons of CO2 per year must be our pollution cap. However, there is another disassociation that must occur here; namely financial experts in urban centres, far away from the oil fields are talking about transition as if the oil companies are going to just love this whole ‘climate-change agenda’. The consequences of the model make short-term harm very real for the oil industry workers who enjoy their work. I don’t mean we’re wrong about climate change because oil workers might stand to lose economic opportunities due to an imposed legislative or imposed financial capital re-allocation away from fossil fuels, but slave owners in the US lost their economic future because of the threat of legislative decision-making, they were willing to go to war and die in the name of a moral wrong. So, we, including Carney, need to get serious about “Oil Country”. 

Ø  Carney doesn’t necessarily call out who the polluters are…he doesn’t put pen to paper to say that fossil fuel companies are the problem and could be part of the solution. And what to do about Alberta’s transition? Carney doesn’t talk about a way to help Albertans who have driven the Canadian economy forward in terms of GDP should be compensated…and or supported in retaining economic development locally against the back drop of the Rookie Mountains. Think about how Britain settled the slavery questions in 1834 by compensating the owners of slaves? Then think about how the US settled the slavery question between 1861 – 65? Oil is like slavery in some ways as I argued a decade ago.

“When Abraham Lincoln wanted to curb slavery, he was battling the entrenched interests of the Southern US states. Slavery was a moral wrong, but slavery was also central to the Southern US economy. ” – Professor Nerdster

  • Efforts to have a global corporate tax neglects to acknowledge that the best situation is where every other country is paying that tax but you have a loop hole.
  • Just because you can build something doesn’t mean you should. Do people want self-driving cars? Do people want to charge their cars? This is where regulation forces the issue.
  • Carney’s really skates on thin ice in this chapter because industrial processes rely mostly on energy to melt and shape the products that we enjoy, most items in your house have a carbon footprint that you never see but enjoy the fruits of, the cost to create that same product without generating CO2 is likely significant to day. Many companies would not exist if it was illegal to pollute….This issue is where the rubber hits the road, unless there is total control of the means of production but some over-arching legal body, there will be an incentive to use fuel…let me think about this further. This is manufacturing products on the moon becomes more attractive as CO2 there is additive….impractical in my life time but, you know….fun to think about.
  • With what power can Carney achieve having his preferences reflected in the world? What Carney and others are missing is the way to show the end user the consequence of their preferences. While people do tend to seek out like-minded people, and shun polarization, running for public office would be his best route….. What funding model do we have?
  • Carney seems to fail to acknowledge that what Greta Thunberg is ignoring is that the transition could be very painful and as such not materialize as she extrapolates it ought to. She is also a child, probably should be in school. The consequences of climate change are heavy in her mind, the consequences of transition aren’t thought out. Both are subjective, terribly difficult to predict and forecast…even with climate physics firmly in the corner of “2 degrees Celcius is a big deal…”
  • The global climate strike didn’t really move the needle, did it? Is that really how we measure sentiment on climate change being a mainstream concern?
  • Reporting has been tried before, startups were created to create a global standard but then failed; Amee.com. Companies do want to participate in green-washing but not so much on their own accord anything that undermines stakeholder value is a threat to the CEO’s job.
  • TCFD network: a solution by the market for the market….which Carney forcefully argued didn’t work in the 2008 financial crisis….
  • Self-interest trumps the interest of others. That’s what COVID illustrated. The self-interest of profit generation is so strong that you would wonder if Carney lives in a fantasy land…no, he just happens to be correct about the climate physics at play, may need more salesmanship. 
  • You start to wonder if Carney is a heavyweight with all the details, annotations and facts but a lightweight with bandwidth of human nature between self-interest and self-lessness . Maybe he’s got an overly focused vantage point on reality. For example, take a pan for your kitchen. How much did that pan cost? Is it anti stick? $25CAD pan. Now why is that pan so cheap? The material supplier doesn’t have a carbon pollution tax right now. If you impose a carbon pollution plan on that manufacturer because they are in your legislative geography then another kitchen pan producer who doesn’t have that constraint will. Game theory! Learn it a weep. And there are way to game the system further. The temptation to lie about emissions is massive as Volkswagen did it. OPEC oil producers do it. So let’s be serious about human nature too! We are cheeky monkeys!

Citations Worth Noting for Part 2: Chapter 12

  • Ezra Klein, ‘How to decarbonize America’, The Ezra Klein Show, 27 August 2020.
  • Department of Energy and Climate Change, ‘Electricity Generation Costs’ (July 2013).
  • Energy Transitions Roadmap report version 1.5 (2020)
  • Goldman Sachs, ‘Carbonomics: Innovation, Deflation and Affordable De-carbonization’, Equality Research (October 2020).
  • Climate Action Tracker, ‘Warming Projections Global Update’ (December 2019)
  • Cass Sunstein, ‘How Change Happens’ podcast. London School of Economics Public Lecturers and Events, 14 January 2020.
  • Cass Sunstein, How Change Happens (MIT Press: Cambridge, MA, 2019). 
  • UN Environment Programme, ‘Emissions Gap Report, 2019’ (26 November 2019).

Value(s) by Mark Carney: Intro, Humanity Distilled: Key Takeaways / Analysis

Mark Carney is a banker with a compelling track-record as well as a citizen of Canada, Ireland and the UK. He was born in 1965 in Fort Smith, Northwest Territories, Canada and has a global perspective and an impressive resume. At the same time, he could probably be your favourite prof in university. So there’s that too. In life, you should always plan for multiple paths, and so what makes this book doubly interesting is that it is possible that Carney will enter the political fray in Canada and / or seek more global posts as a thought leader in finance and banking. At the very least, teasing the thought of Carney as Prime Minister of Canada will sell a fair number of copies just for the opposition research. In a parliamentary committee testimony in May, Carney was interrogated by a conservative MP signaling that the Canadian Conservative Party is a bit scared and annoyed that Carney is helping Boris Johnson but also working with the Liberals… Guaranteed that if Carney was saying he wants to join the Conservative Party of Canada, the Tory caucus would sing his praises. Such is the absurdity of partisan politics. This book threads the needle across a fundamentally flawed ideological spectrum. And Carney offers the intellectual firepower and vision that Canada has struggled to cultivate within the legal/business class that dominate its representative democracy.

Value(s) basically advocates for the marriage of solidarity, a sense of fairness with the dynamism of markets. Markets, being social conventions, can be harnessed for good, according to Carney, who clearly lands closely to MacKenzie King, who also wrote a book before running for public office. That book was called Industry and Society which at the time was not widely read and was incoherent. The reason I mention MacKenzie King the Pragmatist In Chief is that he is typically on the top three best Prime Ministers of Canada list and Value(s) is easily the best pre-political primer since the Audacity of Hope. Value(s) is not really an emotive, poetic document but I think the rigour of Value(s) makes it a book that you can imagine is referred in 2121 as a historical document. Not kidding here. This book is really a doorway to better understanding how value has been approximated over the last few centuries.

Unfortunately, while Carney’s Value(s) is a blueprint for political leadership, it is also unapproachable for people with a reading level below Grade 8…(and maybe Grade 7 with a glass of wine because when you watch too much tv, you’re reading level slowly declines over time…the golden age of television has yet another unintended consequences, other then the decline of cinema)….. As such, this series of posts will explore his ideas (I hope clearly) as well as provide a tough critique where there is disembodiment between his theory and practice/reality. 

Private Sector experience:

  • Goldman Sachs (1990 to 2003)
  • South African international bond market launch and the Russian financial crisis were where he cut his teeth.

Current Private Sector roles:

  • Brookfields (2020 to present)

Public Sector experience: 

  • Deputy Governor of the Bank of Canada (2003 to 2008)
  • Governor of the Bank of Canada (2008 to 2013)
  • Governor of the Bank of England (2013 to 2020)

Current roles:

  • COP26 point-person on finance for Prime Minister Boris Johnson
  • UN Special Envoy on Climate Action and Finance

Political Leanings:

Note that Carney makes no mention of the fact that he is likely advising the current Prime Ministers Office and Cabinet Ministers in Canada, in Value(s). He is a prospective Prime Minister of Canada via the Liberal Party of Canada which is the default / natural governing party in federal Canadian politics. 

Mark Carney’s central question in Value(s) is: 

How do we bring some humanity into our capital-centric system of valuation? 

Since we observed that human nature supersede socialist command economies (acknowledging the fact that Wal-Mart and other companies are command and control entities), we ought not to try to escape capitalist markets of value measure, Carney argues, instead we should figure out:

How do we mitigate capitalism’s destructive power and harness its constructive power for a brighter future? 

The Parable of Pope Francis: ie. markets are humanity distilled…markets take out all the best of us

Carney recounts how Pope Francis invited him, then the governor at the Bank of England (salary of £480,000 per year) and other elite decision-makers, to a conference. The pope raised a glass of grappa and said “Humanity is many things – passionate, curious, rational, altruistic, creative, self-interested. But the market is one thing: self-interest. The market is humanity distilled.” The Pope’s challenge to these insiders is “to turn grappa back into wine, to turn the market back into humanity. This isn’t theology. This is reality/ This is the truth.”….and then everybody cheered and said saluti. (Page 3, Value(s))

  • How do we turn grappa back into wine?
  • What’s grappa?
  • The market is humanity distilled, markets of exchange are self interested actions distilled into a quantified format where the nuance is lost. 
  • Humanity is many things, our jobs as bankers is to turn this market back into true reflection humanity…..

Threadneedle Street Thinking:

Carney argues that radical changes are required to build an economy that works for everyone within that economy (staying vague about global, national or local economy). His audience is certainly white dominions / advanced countries that he is most familiar with as a private and public sector banker. He is threading the needle between capital or monied interests and some social democratic concepts, nominally speaking. 

In order to come to that conclusion that we need our system of valuation to be adjusted to reflect more what it does presently, first Carney asks you to consider

  • What is value? 
  • How is it grounded? 
  • Which values underpin value? 
  • Can the act of valuation in the market also reflect values in society? 
  • Are we under-valuing what matters most? 
  • Why is Amazon worth $1.5 trillion while the value of the actual Amazon rainforest(s) is $0 trillion?
  • As Oscar Wilder said “we know the price of everything and the value of nothing?” 
  • As Albert Einstein said “not everything that counts can be counted, and not everything that can be counted counts.”
  • As John Kay said “profit is to business as breathing is to living. Profit is not the purpose of business, it is necessary but not the purpose.”
  • Have we moved from a market economy to a market society? Carney says “yep” and then asks how do we bring back humanity in our calculation of value?

Valuation and markets are disconnected. Values represent the principals of behaviour. Rawlsian idea of the veil of ignorance, not utilitarian or libertarian. 

Three Crises: 

  1. Credit, 
  2. Covid, 
  3. Climate change

Imposes costs created by this generation on future generations. 

To stop the catastrophe, we need:

  • Dynamism
  • Resilience
  • Fairness
  • Responsibility 
  • Solidarity shared
  • Humility: to act as custodians 
  • Sustainable globalization 
  • Markets are incentives to build social capital. 
  • Help us realize our potential. 
  • Leaders have to earn their legitimacy.
  • Great leadership is ethical…….next Carney will look at how value is determined historically….
Introduction: Humanity Distilled Chapter 1 Objective Value
 Chapter 2 Subjective Value Chapter 3 Money & Gold
 Chapter 4 Magna Carta  Chapter 5 Future of Money
 Chapter 6 Market Society Chapter 7 Financial Crisis
 Chapter 8 Safer FinanceChapter 9 Covid Crisis
 Chapter 10 Covid Recovery Chapter 11 Climate Crisis
 Chapter 12 Climate Horizon Chapter 13 Your Values
 Chapter 14 Values in Companies Chapter 15 ESG
  

Analysis of Introduction Humanity Distilled:

  • Not a Light Read: Carney is a bit academic and pretentious and so I don’t know that this book will be widely read, therefore, I have provided these detailed summaries for the benefit of others who don’t have the time but the inclination. This book is not a light read….
  • Well Sourced: Academics like to detail to the reader ‘what you are going to learn before you learn it.’ Value(s) does this. Typically, this is a no-no. Mark Carney presents his book as a well sourced academic textbook rather than a public intellectual page-turner, it ought to be distilled which is what I’m attempting to do here. Note also that there is bias of course in the academic work that Carney sources…consensus is rare, making jobs for academics plentiful. 
  • Grounded Enough?: Mark Carney has the financial and global connections / rolodex and the experience from one of the most successful investment banks, for 13 years, which means he’s likely cut-throat. Or did he get where he is through sheer intellect? It isn’t clear that politics is in his blood. Politics is about winning, fighting off the other candidates and horse trading / cutting deals. Often, the choices are between bad and worse. Carney hasn’t been in that circumstance as much based on his writings here. Yes, he’s been in the top public / private sector tower of central banks but very far from the general economy or the consequences of his actions (the data that describes the consumer price index is a bit different from the abject poverty in rural Canada for example). Ironically, I speculate Carney may be more like the bankers who leveraged and imploded Canadian ABCP asset backed commercial paper in Chapter 7 then he realizes. Monday morning quarterbacking the financial crisis and being lucky doesn’t = great leadership. Having said all that, he’s still pretty cool.
  • All That Glitters: At the Bank of England, Mark Carney explains as the governor touring the gold vault that those gold reserves are mostly pointless beyond a back-store of value. The gold is less valuable now that it is NOT the basis of central bank money management since finding new gold mines used to mean inflation automatically. The British pound is a FIAT currency after-all.
  • Financial Community Is More Selfish Then Carney Lets On: One thing that will come up multiple times in Value(s) is that Carney underplays just how much investor folks are more self-interested then altruistic compared to a bell-curved population average. There is a stronger interest amongst financial specialists to capture a value / capital / make money which is why some folks getting into finance in the first place. This mentality is what Bill Maher / Marxism / Socialism ridicules. That ridicule asks what did you do to become so wealthy, BitCoin enthusiasts or stock speculator? Reading the market? Fundamental analysis? Financial players are mostly in the value capture game rather than value creation game and so their service is more to help price assets and to allocate capital which is valuable to be sure….but they definitely of incentivized by making money themselves over that of allocating scarce capital….
  • Multiple Pathways: Perhaps influenced by his British spouse (“happy wife, happy life”), Carney is very much a British man with a Canadian accent, the book is written in British English with “s” and not “z” for equalise, organise and characterise, autumn instead of fall. In the Audible (audiobook) version of Value(s), Carney pronounced aluminum the British way (“Ali-min-ium” and not the Candian way “Aluminum”.) Expect that as a line of attack if he does join the political fray via the Liberal Party of Canada. There are multiple pathways for Carney, Canadian PM, best-selling author and another global post. It’s a win-win to suggest he’ll enter Canadian politics….it sells more books.
  • Market Logic and the Ideological Spectrum Are Illusions: David Simon another brilliant man (wrote ‘The Wire” HBO show) and Mark Carney have much in common: they both protest capital as the problem and solution. I have long maintained that money is a proxy for value. It’s the values that people price that is the problem/opportunity. The wealthy tend to value putting a high price on drug offences and sending drug dealers to jail. David Simon makes a relatively cursory case for mitigating the negative effects of capitalism but the problem he and Carney have is that it is what is in human nature that needs to be harnessed. We are cruel to be kind and we are adaptable to how value is measured.
  • Gell-Mann Amnesia Effect: If Carney says one thing that I think is a bit wrong, then does that error mean the areas in which he is an expert and I don’t have enough knowledge could also be wrong as well? This is known as the Gell-Mann Amnesia Effect. David Simon’s criticism of political donations do lack a bit of nuance…off topic, I know, but Simon is right about the Ideological Spectrum and is a brilliant TV writer but his views on political donations are a bit warped; The Wire and Political Donations. David Simon is misguided on political donations, first it’s often reverse causation, interests donate to the horse they think will win and or aligns with their views already. And no one will ever prove my case or otherwise conclusively as politicians vary. Second, if a politician collects $1M from special interest X and $500K from special interest Y in which Y is the opposite of X. Then the politician is not perfectly beholden to either X or Y donor, is she? Boom! The politician has $1.5M from donors that he/she will show to be satiating. Same with any one voter or one million voters. Gather up trust, potentially betray said trust with the plausible deniability of the legislative process…that is how politicians operate in a representative democracy, it’s ugly but true.
  • Writing This For A Long Time: Mark Carney’s PhD thesis was “Dynamic advantage of competition.” In one sense, that’s obvious but not for people doing the dynamism. Competition is really bad for the people doing the creating. Makes you strong yes, but no one willingly supports competition at the entrepreneurial level. So this hits on the issue of the expert may not be the most appropriate person to build the future. 
  • Euro-Ameri-centric? Is Carney really talking about Anglo-Saxon and European conceptions of value for the most part or where is the line there? Does his message resonate with different cultures that he doesn’t work in very much? Is Value(s) getting translated into Mandarin? Will the general public read this book as closely as I have? 
  • Another MacKenzie King Mention Here: From a political perspective, Carney is aligned with the 3rd way style Labour party of Britain that can create successful coalitions with various interest groups with competing appreciations for economics. His embrace of the market as well as some undefined mixture of solidarity is not novel, it is precisely what MacKenzie King did by showing he could work with both labour and management in contract disputes. 
  • Expert/Metaphor Disconnect, Should the Pope Be Dictating Public Policy? Is it possible to turn grappa into wine? People of all socio-economic statuses drink wine, but grappa is a very European thing…is the Pope out of touch or is Mark Carney out of touch? Or am I missing out on the finer things in life? Is the Pope really just saying that human nature suggests that we need to impose agreeable behaviour? The folks who typically self-select into banking are focused on enhancing their own interests (and their shareholder by the way) by maximizing shareholder value, buying low and selling high and thus capturing value. To a certain extent value creation through the allocation of resources is certain value facilitating and thus partial value creation and value capture….
  • Great Speaker: Carney gave a commencement address for the University of Toronto, 2016-2018 MBA program which was further insight into his thinking

Takeaways and Insights from Barack Obama’s A Promised Land

Representative Democracy is Emotional / Inspiration to the Public and then Rational / Legal to the Legislator

When Harold Washington became the first African American mayor of Chicago, it wasn’t so much what the guy did (legislatively), it was how he made you feel, according to Obama. Because having Washington as mayor of Chicago suggested that someone who looked like Obama could make a difference. Symbolism matters. For Obama, results aren’t necessarily as important as the symbolism which is foreshadowing for the Obama presidency….Legislatively, as we know, Obama struggled as president. You can blame others all you like, the fact is, he wasn’t able to get as much done over an 8 year presidency as he marketed in order to get there. The trifecta of special interests, money and deadlock were increasingly powerful at the federal level. But….the symbolism of having the first African-American president is impossible to calculate and also awesome….

A Good Philosophical Question for Every Citizen

Obama would ask, as a community organizer, ‘how are things right now and how do you want them to be?’ The gap between the way the world is and the world you as an individual want is an important consequentialist question. Systematic (financial, institutional, social) racism [plus individual acts of racism] has led to discrimination on many aspects of life including getting textbooks, the time value of money, SAT prep and being passed over for bank loans. Solutions need to come from aspirations, values (what do you deductively believe is needed). Unfortunately, what we think is needed isn’t always what we actually need….

Rising Up Takes Grit

Obama worked on project vote ‘92. And in his run for state senator in Illinois, thanks to his volunteer work on that project, he had built credibility and would continue teaching while a senator. Obama’s 1997 campaign gathered four times the number of signatures to register because they figured that the Party would invalidate a huge number of signatures. He won because he was better organized.

Horse Trading in Illinois State Senate (1997 – 2004)

  • Being a state senator was like being “a mushroom….covered in s#@$ in a dark room….” Illinois politics was basically a backroom-dealers forum, where as long as you didn’t hit on any hot button issues that would get attention in the press, 90% of the public didn’t care. It was the worst aspects of representative democracy; simply not about representing actual voters but rather the competing legislative factions (i.e the disgusting sausage factory). As such, the debates on the floor were ignored. For Obama, the thought was that if you took a chance on an innovative policy idea, it could cost yourself the seat. The Democrats were also in the minority during 5 of his 7 years in that role.
  • The gerrymandering in Illinois (urban/rural/race) was such that if you wanted to get services for your constituents you truly had to convince senators in other districts to support your campaign. And that created a pork barrel / horse trading / crossing the aisle approach on votes that you are tacitly obligated to support in exchange for what your constituents care about.
  • Obama didn’t dig the legislative realities…and this would haunt him as president where he was relatively ineffective in pushing through policy that his rhetoric demanded.
  • At the first available opportunity, Obama wanted out. He had commuted to Springfield and played poker one too many times.
  • His first offramp was to run against Bobby Rush for Illinois’s 1st congressional district for the US House of Representatives in 2000. However, Congressman Bobby Rush had an 80% approval rating. Then Bobby Rush’s son was shot and killed which further bolstered his support. Obama lost by 30% on a ticket of bridging divisions.

Losing Two Races In A Row = Your Political Career is Likely Over

Trying again, Obama told Michelle that “if we loss this [2004 US Senate race] then we will be out of politics for good.” Of course, politics is random and chaotic. And he figured that if he cleared the democratic field, he “would be able to run to end zone untouched.” Obama sought support from the most powerful in Illinois politics within the black community. “Wouldn’t it be great if I was elected to the US Senate then we would have a black person at the federal level” was Obama’s pitch. David Axelrod was also brought on the campaign. When David Axelrod agreed to work with Obama, he insisted that Obama raise 5 million dollars…or drop out. Hence, fundraising became a major pre-occupation….and likely involved selling his candidacy in the ridiculous double game that is fundraising. Attracting donor that then think you are in their back pocket, while turning around and doing what you want, donors be damned in some or many cases.

Your Spouse May Be Rational and Therefore Not Believe in You Fully

When Obama was a state senator, Michelle’s point was “just promise me I don’t have to move to Springfield.” Now, Obama’s strategy, if they won (and needed a second home in Washington), would be to write a second book, as the only black senator, he would get a lot of attention nationally and be able to sell his book and live off the proceeds. Michelle said that was “magic bean talk” considering his Dreams of My Father book (1997) was not lucrative. It seemed like climbing up the bean stock and slaying the giant and then bringing back the golden eggs. She doubted him. She even said that he would not get her vote. She was wrong.

Politics as Poetry 1, Winning with Inspirational Words / Bold Leadership Positions

Obama needed to raise money, increase visibility in the media and issue sound bites that resonate. He got support from unions etc and gave a speech about the Iraq war that made waves for its obvious prescience. I am not against war. But Iraq is not Al Qaeda. Obama got attention online for opposing the War in Iraq. It was a really good speech as he argued what many in Canada, for example, recognized, that the US had not finished the war in Afghanistan etc. By 2004 Obama had the momentum. On March 6th, 2004 Obama won the nomination which was as good as winning that actual US Senate seat. He won with all kinds of demographic groups and worked with Robert Gibbs. All the while, Obama was thinking about his manuscript called The Audacity of Hope.

Politics as Poetry 2, The 15 Minute Speech That Changed American Politics

There’s not a liberal America and a conservative America – there’s the United States of America.” – DNC keynote speech 2004

  • A lot of good politics is poetry and Obama’s speech at the Democratic convention in 2004 was an exceptional case in that column. If you watch JFK, it’s clear Obama was more charismatic than JFK. If you watch Bill Clinton, it’s clear Obama was more poetic than Bill Clinton. It’s not just what you say, it’s what they hear.
  • Obama was the James Bond of public speaking. He was slick whenever he had prepared remarks.
  • The buzz was palpable: black, handsome, well-educated, charismatic, Obama was untarnished and exciting. The idea of a Hollywood-like Black president was a delicious storyline, it was pure America. Emotionally, he resonated with a wide base even if it was paper thin or kind of superficial.
  • His senate race was made easier as a result of the DNC speech as well. The crowd sizes for Obama were massive. The Republican candidate chased Obama around with a video camera hoping to catch him in a gaffe, that’s how desperate they were and then that opponent dropped out when they couldn’t find anything. The Republicans carted out Alan Keyes as a backup but he was a cynical play in a Blue state.
  • Obama won while Kerry lost in 2004. Obama got an apartment in Washington. Michelle how did you pull this off? “Magic beans baby magic beans.” Obama wanted to be a workhorse. Obama was able to attract talent at 43 years old.

Jobs That are Good Training Grounds but You’re Not Going to Have Much to Show for It

1) Community Organizer,
2) Illinois State Senator in Illinois,
3) and yes, even US Senator…

Congress (Senate and the House) was a grand debate forum but it was all managed by the Republican majority which roll called the Democrats in a, what-felt-like, permanent majority. How long would it take for things to be possible in Congress? In A Promised Land, Barack Obama points out that Illinois state senate was a waste of time, Washington government was also a messy situation where the longer you spent there the more tarnished you became. It’s a common complaint that the only people who stick around during the long wilderness of opposition are unfortunately a bit nutty at times. Obama is not a Legislation guy, maybe he read and didn’t like Lyndon Johnson’s approach or maybe he figured he could wing it. This ‘just do it’ approach would be a problem when it came to the horse trading, persuading the other side and in getting legislation passed in the US legislative branch.

The Power of Identity Politics Is Awesome, If You’ve Got It Flaunt It

There is a strand of political thought that says a white male cannot really represent the perspective of a different identifiable kind of fellow human being and or that a group of men will develop group think in the legislative process and overlook the perspective of fellow human beings. It’s a well regarded argument… So much so that Obama was being catapulted into the lime light on the back of his 2004 DNC speech + all his other accolades.

When there is pressure to run for president, you should heed the call. For Obama, the groupthink in the US senate was going to chip away at his brand and half of Democrats supported the war in Iraq or other bad Republican policy in exchange for various horse trades. Obama didn’t believe in destiny. But he also didn’t want to play the legislative game. Meanwhile, he was getting a disproportionate amount of national support. A lot of attention was directed at him. They wanted him to run in 2008 because he was rock solid, had the pedigree, presentation skills and was well liked. Ted Kennedy brought him into his office and said ‘as a matter fact, you’re not gonna be able to win without taking a chance and doing it.’…‘You’re going to regret not doing this if you don’t and it’s the time that chooses you not the other way around.’….’There is already a lot of energy around your campaign suggesting that this was very doable.’ – Ted Kennedy. Identity politics was truly Obama’s secret sauce alongside his politics as poetry skill-set…Again, this would be a problem when it came to legislating as president since Obama didn’t like how the sausage is made.

Who Wants to Hitch Themselves to Your Wagon? That’s the Best Test

In party politics, you build a campaign and attract talent. Chris Dodd and Hilary Clinton etc all planned to run. At this point in 2006, Obama had to run! He admits that his megalomania was driving the idea that he should run in 2008. Obama worked in his campaign manifesto, triangulations that were aspiration and vague and poetic, all of which was exemplified in the Audacity of Hope: a major publication success. “I am thinking about the midterm 2006, running for something else.” Obama mused…. Gibbs said “Fuck That!” He was not irrelevant, Gibbs realized that he could win and become president. Go big or go home.

The Laser Focused Blank Slate over the Tarnished Persona – Should Obama Have Waited?

“Change will not come if we wait from some other person or if we wait for some other time. We are the ones we’ve been waiting for. We are the change we seek.” – Campaign Speech 2008

  • Time = baggage.
  • Media = perfectionists.
  • Partisans = dumpster divers / demonization
  • Politicians = adversarial / power-hungry / insular / sheltered
  • Leadership = communicating with charisma, inspiration and hope
  • Obama played partisan games as well, demonizing Republicans etc. But the above factors put Obama in the 1st row of candidates in the Democratic 2008 primaries even though he literally had done nothing of significance legislatively on the state and US senatorial level. It’s like deciding you should become the CEO of a company after managing one of its retail stores….
  • But this has happened before…note also that each of these men started very young on their path….
  • JFK (Junior senator was president at 43)…
  • Barack Obama (Junior US senator was president at 47…)
  • More experience but young:
  • Teddy Roosevelt (Governor of NY, technocrat was president at 42)…
  • Bill Clinton (Governor of AK was president at 46…)
  • Ulysses Grant (Military leader was president at 46…)

Note that JFK and Obama were both ineffective at passing legislation for the most part, as you can see below + according to Robert Caro. Of course, data doesn’t tell the story. Generally good at handling global events, but neither those two inexperienced senators were able to really do what Lyndon Johnson or Franklin D Roosevelt were able to do legislatively.

Sacrificing Your Family for The Big Picture

  • David Plouffe (campaign manager) said Obama needed to use the internet to fundraise for individual donors + then he needed early primary momentum to overcome the Clinton juggernaut. Obama did not see Michelle or the kids much for 2 whole years. He needed to be pathological / laser focused. The chance to compete at this level, there were a lot of Democrats running for president; he asked himself, why do I need to get into the White House. Why me! Spark for a new generation! Change politics as usual!

Don’t Be Too Academic, Although It Is A Better Starting Point than the Inverse

The belief that he should not lose his nerve was critical. In 2007, Obama announced in Springfield. And he was hoping to catch lightning in a bottle. Obama wasn’t really all that good, he worried. Then he made a major gaffe by saying that the lives of American soldiers had been wasted in Iraq. Obama had 4 arguments for every issue.

About Hillary

On Hillary Clinton, Obama felt she was strong on policy, solid on experience however she had been overly scripted / calculating, she was very hard working but she couldn’t break free of the Clinton political divide.

Emotive Debate Techniques Rule the Modern Age

The best answers in the debates were to show that you would always be on their side. Emotional answers. Not these skirting the issue answers. You needed to show you cared! People are moved by emotions not facts. Obama was not well organized. Donors could count on us raising their taxes, Obama said. It was a movement with Obama as spokesman. This is not up to you. We are all in this.

Iowa Caucusing, A Major Campaign Strategy / Investment, Win Early

Caucusing is time consuming and means you have to make an evening out if it. Democratic caucuses needed to win people over. Covered 90 counties and target the democratic. Obama had to try to get the unorthodox ideas off the table, 1 idea was genius, a butter bust of Obama with a sign that read: vote for the guy with big ears! Anti-pant suits was not appropriate, Obama wanted a positive campaign. Not a nasty campaign. 87 days in Iowa. The 90 volunteers for each county was key, Obama’s team learned to listen to volunteers. Month by month they worked Iowa. Field organizers. How did job creation programs fail? How are things as they are and how ought they be?

Retail Politics, Obama had it better than Clinton

There was a lot of excitement in the air with the possibility that Obama could win. And a little woman, about 5’3″, 65 years old, in a big church hat, with big glasses, smiled right at Obama at a campaign event. And she said, ‘Fired up!’ They all said, ‘Fired up!’ We hear her shout, ‘Ready to go!’ And the people said, ‘Ready to go!’ That’s the kind of electricity Obama created with his candidacy: that je ne sais quoi. “Getting fired up and ready to go!” was the chant that Edith Childs shouted in her own public engagements and it stuck to Obama for the rest of the campaign.

Crafting Winning Views

Politicians don’t want to tell hard truths, Obama was willing to say things that Clinton couldn’t, like the Iraq war was a mistake. In reality, Clinton probably supported the Iraq war in exchange for getting other bills passed through horse trading. Obama was unconventional. On foreign policy, Obama said he would take the shot at Osama Bin Laden if Pakistan was harboring the terrorist. The primary voters supported his views while the Democratic party elite disagreed with Obama’s foreign policy approach.

Your opponent’s policies have failed and Washington is broken. Who can disagree?

Nasty Campaign Attacks, Usually Involve Warping Own Statements

  • Joe Biden didn’t think Obama had the maturity to lead. Hilary Clinton’s campaign guy said that Obama had dealt drugs in college. One of Obama’s staff (Samantha Power) called Clinton a ‘monster’ to reporters. Attacking her people, Clinton was unhappy and let him know at the tarmac. Obama didn’t get all the good breaks.
  • He made a “gaffe” about how Reagan had reframed the US which was taken out of context to seem to be an endorsement. Bill Clinton didn’t reframe American politics the way Reagan had.
  • On the debate stage, Clinton was asked ‘How do you feel about being unlikeable, Hillary?’ Obama said “you’re likeable enough” then the story exploded as a sexist move.
  • Clinton cried at an NH campaign event and some thought it was a good media position. Then she won the primary….journalists without data science training though there was a causal link (i.e. that Hillary’s tears = victory)…
  • Obama said that setbacks were expected.
  • The fact is, each candidate was trying to convince the voting public that they themselves were more worthy than you. Your opponent will try to count every action you had taken to say that you have worse judgement.
  • Obama won Iowa with a massive turn out on January 3rd, 2008. Oprah was supportive of the campaign. Michelle was a closer.
  • He brought his extended family on the campaign for a visit. The community of America, how it manifests in Obama’s own diverse white/black multi-ethnic extended family!
  • Obama didn’t want to take black voters for granted but he also didn’t want to alienate the Democratic party base. Too much talk of civil rights and police brutality would basically turn his candidacy into an ethnic voice rather than a pan-American candidate, according to Obama. He wanted to win. He wanted to use language that captures the group that he needed to win over which was the majority whites. Hence, Obama was all about universal programs over specific black policy. According to Obama, blacks had to get inside and not push too hard on policy and just support Obama and trust change could be possible.
  • Jeremiah Wright was Obama’s pastor in Chicago and he had said America was bad while Obama was a member of that church. The Rolling Stone article comes out; he called Obama. Jeremiah Wright was a wingnut but also a pillar of his community. Wright became a victim very fast. Theologian. Said that America is racially motivated, Obama felt that he went “full ghetto” with the public attention he received for being associated with Obama. So Obama had to throw Wright under the bus. Cut ties. Obama did so unreservedly.
  • Michelle also said something harmful, “it’s the first time I am really proud of my country…” This was deemed Anti-American, just trying to score cheap political points.
  • Obama got a secret service detail early because of the number of threats to his life early. He was trapped by the secret service, though, unable to enjoy the freedoms he used to have.

Winning = one opponent says you’re too X and other opponents say you’re too Y

Obama was either too white, too mainstream, too radical…There is good and bad cholesterol. And good crazy and a bad crazy. Take the steps to gain justice in our time, type rhetoric was the perfect fluff that got Obama elected, sufficiently vague to appeal to a wide range of people, triangulation but with passion and poetry that Clinton could not exude. To win you have to show compassion for the down trodden for those who fell between the crack, the drug addicted single mother.

Inequality compounds itself both in financial and real terms. Manufacturing towns lost their life blood. SAT prep courses, etc. Ownership economy (the Bush approach) wasn’t working. Obama won the democratic nomination but two years of running for president cost him his share of time with his kids.

Later as president, Obama writes that he was perceived as either too chummy with Wall Street or too hard on Wall Street depending on which group you talked to. Too weak on Medicare for All or too aggressive…so you know you’re winning when different opponents are seeing different problems with you (ie. you are the everyman change agent).

Politics is Poetry 3, Winning Speech Lines

“The choice in this election is not between regions or religions or genders. It’s not about rich versus poor; young versus old; and it is not about black versus white. It’s about the past versus the future.” – South Carolina victory speech

Andy Favreau met Obama in 2004, his speech writing has become legendary. …

“And because of what you said, because you decided that change must come to Washington, because you believed that this year must be different than all the rest, because you chose to listen not to your doubts or your fears, but to your greatest hopes and highest aspirations, tonight we mark the end of one historic journey with the beginning of another, a journey that will bring a new and better day to America. Because of you, tonight I can stand here and say that I will be the Democratic nominee for the President of the United States of America.” – June 3rd, 2008 Primary victory

“I want to be the last guy in the room when the decision is made.” – VP Joe Biden

The choice came down to Tim Kaine or Joe Biden. Kaine was civil rights lawyer…Obama felt that Joe Biden loved to talk long while lacking gaffe free days. Biden had said Obama was ‘articulate and bright’ which the press did not give him the benefit of the doubt on. Biden was a skilled debater. He had embarrassing defeats. His wife and baby daughter were killed. He took care of his sons. Obama wanted a partner. For relationships in congress; Joe Biden was a key.

Denver Convention 2008 – Acceptance Speech Masterclass

Michelle gave a great speech. Obama didn’t want to draw comparisons to 40 years prior when Martin Luther King Jr made his March on Washington. “Never thought we’d see the day” was the narrative of the DNC speech. Balance between policy goals and firing Republicans.

Election 2008, Catch Up + Identity Politics

  • John McCain didn’t talk about climate change and the economy was worsening. McCain needed to do something dramatic. McCain picked Sarah Palin! Got millions of dollars for playing the identity politics card.
  • She was a disrupter; pageant queen who took on the Republican establishment in Alaska, hunting in her spare time. She was perfect for authenticity, the elite were just wrong in her summation. The 44 minute Sarah Palin RNC speech was hugely popular, the new hockey mom.
  • “She had good instincts” according to Obama. However, she didn’t know anything about foreign policy. She didn’t know anything about the issues or basic functions of the government.
  • During the national campaign, Obama went on an international junket to show that he could be American president. Obama met with all the international leaders. Palestinians, Israel, Merkel, etc.
  • Pivoting from the primary to the general election. Using the primary folks infrastructure to succeed in the general.

Financial Reality of the Late Summer of 2008

Refinancing his house in 1993, just getting the credit card cleared, Obama had a $40k cheque for his book but not much else. You could use your house and flip it as long as you watched the balloon payment index. But then Chicago housing market softened and Obama learned a lesson therein. Then in 2007, the entire housing market and the subprime mortgages started to implode. Obama felt primed….

Obama’s View of the Finance Persona

  • This credit crisis was the financial sector’s comeuppance for being generally ‘smug and entitled’, conspicuous in their consumption and not interested in how their actions affected others i.e not being systematic thinkers. Seems like a broad generalization…Obama was all about subprime mortgages in 2007 according to himself. He was talking about subprime mortgages and talking about the bubble, in the early 2000s which is in line with general economist speculation at the time but seems a bit overstated. There is always a future down turn or bubble burst…
  • Obama basically predicted the future suspiciously accurately…
  • An example of (UPO) unproveable partisan opinion, the “Stimulus was pulled back too soon in 1936 so we needed a war.” Keynesian economics makes sense, infrastructure spending…
  • Note that Obama also doesn’t mention deficit or debt much in A Promised Land.
  • Anyway, on the side, it was much worse, McCain supported the deregulation of the economy generally. McCain owned 8 homes. There was a danger of depression levels of unemployment and McCain seemed out of step.

It’s Other People’s Fault if You Can’t Get Congress On Side

  • Lehman Brother’s collapsed on September 15th 2008 and it meant that McCain and Obama might need to do a joint agreement on the rescue package since there was a legislative deadlock as the congress waited for a new president….BUT action was required in late September, the financial crisis was heating up.
  • McCain suggested “how about we suspended the campaign for a few days?” Obama phoned McCain to coordinate a solution, but McCain said he’d think about it and then McCain unilaterally pledged to suspend his campaign; he decided to one up Obama. McCain publicly called for Obama to suspend his own campaign alongside McCain about 30 minutes after saying to Obama, that he [John McCain] would think about Obama’s offer. McCain wanted to hash out a $700B TARP deal with Obama. Bush, McCain and Obama. It was a political stunt.
  • Democratic + Republican + McCain + Obama and Bush’s people all met in the White House for a joint session in order to pass TARP. Democrats had Obama talk first. Boehner said he didn’t want to withdrawal but that TARP wouldn’t work. In Obama’s opinion, the Republicans weren’t familiar with their own legislation. Bush asked McCain to speak, and McCain refused saying “I’ll just wait for my turn.” The guy who pushed for campaigns to be paused had now taken a back seat on TARP.

Politics is Poetry Part 4

Obama won big. 365 in the electoral college.

“If there is anyone out there who still doubts that America is a place where all things are possible; who still wonders if the dream of our founders is alive in our time; who still questions the power of our democracy, tonight is your answer. It’s the answer told by lines that stretched around schools and churches in numbers this nation has never seen; by people who waited three hours and four hours, many for the very first time in their lives, because they believed that this time must be different; that their voices could be that difference. It’s the answer spoken by young and old, rich and poor, Democrat and Republican, black, white, Hispanic, Asian, Native American, gay, straight, disabled and not disabled ¬- Americans who sent a message to the world that we have never been just a collection of individuals or a collection of Red States and Blue States: we are, and always will be, the United States of America! It’s the answer that led those who have been told for so long by so many to be cynical, and fearful, and doubtful about what we can achieve to put their hands on the arc of history and bend it once more toward the hope of a better day. It’s been a long time coming, but tonight, because of what we did on this day, in this election, at this defining moment, change has come to America.”

Where we are met with cynicism and doubts and those who tell us that we can’t, we will respond with that timeless creed that sums up the spirit of a people: Yes, we can.” – Victory speech 2008

Building A Winning Team, Not Rocking the Boat

With eyes fixed on the horizon and God’s grace upon us, we carried forth that great gift of freedom and delivered it safely to future generations.” Inaugural Address 2009

  • Needless to say, Obama benefited from independents and Republicans and leftists who wanted something different and projected that sentiment on the blank slate with no track record that was Barack Obama. Rahm Emanuel was a triangulating-Clinton guy. Obama hired Tim Geithner, a Wall street insider as Treasury Secretary. Lawrence Summers from Harvard also involved….
  • The economic team had been on the inside. The righting the ship economically, meant hiring those who understood the system, with all the moral hazard that might entail.
  • Obama argues his hand in mentioning the success of the 90s is correlated with federal policy under Clinton…another UPO, unprovable partisan opinion.
  • Obama kept Bob Gates in as Secretary of Defense.
  • Hilary Clinton Secretary of State, reluctant at first.
  • White House staff is mostly black or Mexican indicating that most presidents were happiest if there was inequality between menial staff and leadership, according to Obama.

Crisis Is Strongly Biased to Being Fixed with a Return to the Default

  • For example, the stimulus package should not include legalizing marijuana, according to Obama.

Republicans Did Not Want Obama’s Rhetoric to Be Converted Into Actual Accomplishments, Instead the Goal Was to Humiliate Obama into a One Term Presidency

  • Congress was fluid in the 1950s and 60s. The Lyndon Baines Johnson era resulted in the re-alignment around race, Gay rights abortion etc computer models of gerrymandering in the 1980s, TV news cycles changed partisanship, the moderates were disappearing; Rush Limbaugh talk radio meant there was hyper partisanship…..
  • Obama’s central thesis / complaint / default in A Promised Land is that he was a victim of his own success and it was other people’s fault that he was not able to pass the kind of legislation that his rhetoric vaguely implied…the jury is still out on that….
  • Obama had to win Republican votes to pass any legislation.
    1) $800B stimulus;
    2) tax cuts;
    3) infrastructure and improvements
  • Boehner rarely deviated from the talking.
  • Nancy Pelosi was not making progress either.
  • These legislators were all unified in wanting to be somewhere else rather than negotiate in good faith.
  • Dissent in party is dangerous because it means what ever legislation was on the books, that legislation might not pass.
  • Filibuster could prevent cloture hence the need to have +60 votes to impose cloture on a discussion.
  • The minority would allow legislation through by using the filibuster and you needed 60 votes in the senate to break that deadlock; aka the supermajority.
  • Republican cooperation seemed very unlikely even though TARP was bi-partisan:
  • Mitch McConnell was not letting members talk to the White House, this anti-communication strategy was not overcome for 8 whole years (i.e. no carrier pigeons or otherwise). Making cross communication impossible. They literally did not want to work with the Democrats at all.
  • House Republicans announced publicly they will not support Obama’s economic bill and likely fundraised off the back of it. Obama was invited to the Republicans Luncheon which was televised. And in that room were almost all middle-aged white men, Obama noted. As far of the Republicans were concerned, the real cause of this crisis was the mortgage house law circa Bill Clinton era. Another, (UPO) unprovable partisan opinion.
  • Rahm Emanuel didn’t have an exact senator vote count but surmised that there were zero Republicans willing to support Obama’s plans. Regardless of the issues, obstruction had fewer downstream consequences than cooperation:
    a) loss of internal party influence,
    b) contested right flank primaries (amplified by gerrymandering),
    c) the Democrats have both the House and the Senate so the Republicans survival is the mode,
  • d) ‘if our primary goal is to get power again so any help Republicans give will make Obama look good’….which isn’t necessarily bad for the country since Congress is a deadlocked, snails pace branch of government….but still…
  • e) the modern news coverage was also re-calibrating as print media revenue was declining and online competition was driven by sensationalism. Obama says the media’s collective approach was to report one side and then the other side and then do polling on horse race politics which got ratings.
  • f) Rush Limbaugh said “I hope Obama fails”, he and other radio talk-shows were channeling the voters to be anti-centrist. That they needed the voter to shift to the extreme to get re-elected as well as increase voter intensity.
  • And a lot of Republicans were being pushed hard by extremist primary challenges.
  • Bipartisan Judd Gregg had to withdrawal his support or suffer a career limiting move.
  • Charlie Crist supported the recovery act; putting people first. And with an Obama handshake, Crist’s career was destroyed. If you cooperate with Obama you will lose! So, February 2009, the recovery act did get passed but solidified a legislative divide with heavy consequence for deviants…

Public Horse Trading Is Sub-Optimal

But wait a second…..the Democrats from 2009 to 2011 had a double majority, so they should have no problem passing legislation, right? Wrong, the average years of a Congress-person in either the House or the Senate was 10.6 years and the divisions were fierce and long lasting so Obama felt he needed a supermajority (ie. secure 61 Senate votes) in order to avoid the Filibuster by Republicans which would log jam legislation and prevent cloture (ie. roll call voting).

Al Franken was the 60th Democratic senator in 2009 but then there were vacancies so it was more like 58. The Congress was only Filibuster-free for 72 days out of the total session. So, centre-right Republicans like Susan Collins and Arlen Specter were key. The Gang of Four (Republicans) made random demands in order to pass bills such as the recovery act. The general public was made aware of these side-deals by the press which made things much worse since it angered the progressives who saw hope and change fading into disappointment, compromise and politics as usual. A type of politics that took progressives, minorities and other Democrat default cleavages for granted. Those folks had no where serious to park their support.

Tim Geithner’s Three Options

  • The US’ credit crunch threatened to trigger a depression; credit was frozen at Fanny Mae, Freddy Mac, AIG, CitiGroup and Bank of America. If anyone of those fell, then it would cause a major financial cascade of balance sheet dependencies. So the goal was to get consumers to invest in the market.
  • There were Three Options:
    1) Build a bad bank that all other institutions could sell their toxic asset to and thus the government owned and foisted the costs on the tax payers directly through a sunk fund; problem being no one knew how to price the toxic assets and then there were pricing complications;
    2) Nationalize the financial institutions which is what the UK government did with Royal Bank of Scotland, i.e. a government take over. There was a danger of losing money and how would the public support this;
    3) Run a Stress Test which might show that market panic was not that bad! The banks didn’t know how bad it was therefore they could do stress tests and then figure out how much against agreed upon benchmark. Markets probably wouldn’t trust the government to audit their books…
  • Obama choose the option 3) the stress test. Obama put a lot of pressure on Geithner to improve communications between departments because the markets were spooked initially. Politically, obviously, the problem is that Obama was definitely abandoning the progressive wing and supported an inside guy.
  • The fact is it is always an inside guy, there just isn’t enough time for revolution. There could be structural reforms later but stopping the bleeding was priority #1.
  • Obama was always trying to minimize screwups, gaffes / pushing his team to the next phase.
  • The stress test was executed for institutions. The collective shortfall was $75B. And the Wall Street Journal said the analysis was very compelling. So through that process of price discovery, Geithner et al were able to arrest the financial crisis and begin the recovery.
  • As a result of Option 3, Obama says that the US economy bounced back faster than the Europeans which is true but associates his policy decisions with that outcome of course, unproveable partisan opinion. He saved Main Street jobs. There was no ‘let-them-fail’ attitude nor was there a ‘nationalize and criminalize the executives of the major banks’ attitude either.
  • Again, at the time, there were a bunch of people who thought he should have permanently altered the financial system with more extreme nationalization and criminalization of financial consequences. Most of those advocates will not have had experience in finance or economics to understand that the consequences were much more uncertain in such a scenario. The worse case would have meant a longer recovery time in Obama’s view.
  • Put simply, he wasn’t willing to revolutionize the system; and to what end state? He says he had a conservative approach to reform. Best to steer the economy away from disaster.
  • And so they managed to get the American Recovery and Reinvestment Act through.

Intractable Habits: Reasonableness, Blame the Other Side and Smoke A Lot

  • Obama had exuded throughout his campaign in the primaries and as president, an even keel balance that frustrated…..
  • There are a remarkably low number of UPOs in A Promised Land.
  • In the wake of the financial crisis, financial leaders gave themselves a bonus once the recover act was passed.
  • As far as Obama could see, the financial leadership rejected responsibility for the sale of sub-prime loans. That they were the arteries of the economy meant it was too bad but they were still linchpins that could not be punished in any real terms (although their career prospected were curbed much more so then their predecessors in the ’80 and ’90 “good times”.)
  • Also, Obama didn’t want to alienate investors. AIG was contractually obligated to give its employees a large bonus.
  • Many complained to Obama that ‘you should be taking over the financial sector!’ But the economics is hostage to the good as well as the bad financial professionals.
  • Obama smoked 6 cigarettes per day. Then he got busy and started smoking 8 cigarettes per day.
  • Obama did a morning workout every day. He chose to quit smoking. He had a lot of nicotine gum ready on the day the ACA was passed.

GM and Chrysler Bailouts

Obama points out that compared to financial technocrats, these auto-sector management folks were amateur about how their sales was going to increase by 2% as long as the government just bailed them out. Brian Deese came up with the incremental support and cost controls. They also wanted to replace Chrysler. To let the iconic Chrysler go under? It was throwing good money after bad. But there was hope with Fiat ownership.

The Chrysler Plants As Another Bailout Argument

The depression across their towns meant political intervention was expedient. Indiana and Ohio, men who had lost they jobs were struggling which was a similar refrain from the 1980 bailout and the mid-terms would hurt Obama if they didn’t give them ‘a fighting chance.’ Brian Deese calculated the cost of Chrysler going under and concluded it was worth it political to use Federal debt and revenue to bail them out….

On the Mind of a President

The president has to protect you from:
A. Oceans rising;
B. Earth frying;
C. Terrorist attacks;
D. The government reading your emails;
E. Nuclear war;
F. Tribalism like in Kenya had already infected US Congress in his opinion.

List of Things that Obama Couldn’t Look Soft On

  • Obama basically continued Bush policies on Foreign Policy, pushing back his left flank saying: I couldn’t look soft on:

  1. Drone strikes on Al Qaeda;
  2. Deportation of Illegal Immigrants;
  3. Free market principles of the economy, with patches of Keynesianism;

Foreign Policy Laydown Aligns with Centrism

“There has been one constant amidst these shifting tides. At every turn, America’s men and women in uniform have served with courage and resolve.” End of Combat Operations in Iraq 2010

  • Obama had conflicts with the civil service who would misinterpret, bury and slow walk presidential recommendations.
  • American forces would be leaving Iraq in 2010 and then use residual forces, once out you don’t want any other force to fill the vacuum however. Obama seems to have amazing predictive powers…..once again…implying his concern about ISIS before ISIS was thing.
  • On the Afghan campaign, once American leave, the Taliban will retrench. Karzai struggled with corrupt government. In Kabul, there were shady operations.
  • Obama in March 2009 increased the troop deployment in Afghanistan even though he campaigned on drawing down troop numbers.
  • G20 Summit: Air Force One has a shower, armored windows and 4,000 square feet of office space.
  • Obama strengthened US global vision; US was able to abide by global standards. The US had Iraq and a bank crisis was threatening to take the US over a cliff which reduced the US’ standing globally..
  • Sarkozy was crazy, genuine and would take credit for good policies. He endorsed Obama. But he was unstable and not consistent and failed to do anything tangible for the US.
  • Obama’s Read of the Global Situation
    – BRICS were big nations and saw the crisis as a means of flipping the paradigm. Give these nations more influence.
    – Brazil had promise;
    – Russia…Medvedev and Putin criminal syndicate;
    – India, hobbled by civil service;
    – China, not in a hurry to take on the world order in 2009;
    – South Africa, broken.
  • Very few countries were interested in acting beyond narrow self-interest. Bilateral negotiations were the preference.

Media Misinterpretation of Obama’s Global Tour

  • The ‘Obama apology tour’ was misconstrued from a comment that every country ought to believe they are exceptional. The media ran with this, pretending Obama had apologized for America’s world superpower status. Michelle touched Elizabeth II’s shoulder which was a violation of protocol….
  • No major pratfalls on the tour, Obama spent a lot of time putting out Bush’s fires. The last turn on the global board game. That is natural. You should expect that the hopeful past was now rough.
  • Turkey’s Erdogan in 2002 reshaped Turkey as a new Muslim nation-state.
  • Democratic values were in decline. Claus in Czech Republic. Obama sees these guys as power brokers at the local level with whom he had interests and had to work with.
  • Captain Philips could have gone badly. Somalis warped, religious and casually cool. Obama wanted to help these pirates rather than kill them.
  • Al Qaeda: Drone strikes and Obama was not able to track with all the burner phones. Ensured a ranking on the targets. Obama couldn’t look soft on terrorism. He did sign an executive order on waterboarding, ending it officially.
  • Obama was going to give a speech in Berlin and use a line called Community of Fate! Unfortunately, it was actually a Hitler line from one of his speeches…Obviously wanting to avoid anything remotely controversial, sometimes hard to avoid, the term of phrase was scrapped.
  • A New Beginning’ Islam speech in Egypt, probably a good speech to point out progress was inevitable and that Islamic extremists were not representative; and that the dictators who gummed up the arguments about fighting democracy were trying to cover for their failures.
  • In the dessert, Islam was dominant in Saudi Arabia….established Islamic shrines + oil development; sent their kids to Harvard and Cambridge.
  • Obama’s dad was not Muslim.
  • Obama rejected personal gifts from leaders. Obama thought about the necklace, how many kids that could help?

“In the middle of the Cold War, the United States played a role in the overthrow of a democratically elected Iranian government.” – Obama acknowledge the 1953 Coup

Mubarak, Ally to US Interests in the Middle-East

Overcame the Suez canal crises on the mid-20th century…. Pan-Arab nationalism…Sadat’s 1979 peace treaty facilitated support from the US. Obama believes that the Mubarak Palace had no broader interest then to protect the tangled patronage that kept them in power.

Healthcare Would Cost A Lot of Political Capital

  • Obama points out that Medicare and Medicaid had the effect of pushing up the prices of health insurance for insured employees in the US. Medicare for All was considered very progressive, to distribute healthcare resources not based on the ability to pay, was pushing hard to the left.
  • Obama was saying that universal healthcare campaign would build on Lyndon Johnson‘s Medicaid and Medicare plans of the mid-1960s. Why should Americans pay way more than Canadians on healthcare per person? Especially when are you getting the same or worse quality of care, another (UPO) unprovable partisan opinion.
  • Note: It’s actually very difficult to discern what is good and bad healthcare on a person to person basis even at a system level, region to region, country to country and that’s ultimately what is being discerned in Obama’s statement: the cost (budget) / capacity (accessibility) of healthcare in Canada is lower with similar outcomes. We enter a biased lens as Canadians and Americans here: of course, my family is better than yours (our emotional instincts are tethered to reality of our self-love). …more on this later!
  • Rahm Emanuel and David Axelrod advised against pushing for aggressive healthcare reform since you would spend a high degree of your political capital and if you lost you would be ‘a very weaken president.’ Of course, what Obama was saying ultimately was that he had sold the poetics and needed a major win or his rhetoric would look ridiculous historically.
  • Obama was overconfident in pushing for universal healthcare, for sure. The Democrats had the Senate, the House and the presidency so they should be able to get these things through. But, of course, the Democratic Party has factions, cleavages, strong and weak interest groups, counter-arguments and donor pressures…the Republicans also had those dynamics.
  • Obama decided to do the courageous thing. Leaving your family with a mountain of debt because you were fighting cancer is a moral problem. Obama’s mom was a victim of bad insurance policy, for example.

Sausage Making in Representative Democracy Clashes with Soaring Rhetoric

  • The politics and optics of reform is very difficult. Obama and JFK had a lot in common in that they were not able to influence congress very well. They didn’t play hard ball with legislator’s careers, they didn’t do the horse trading necessary to get things done. LBJ knew how to get legislation passed. Sure, things were different now, but Rahm Emanuel was no LBJ obviously. Rahm would bully representatives in the shower but it doesn’t appear that he was a skilled and or had the rich experience that LBJ had.
  • Obama had a naïve idea about having a public consultation on healthcare where all the different options could be discussed….but Rahm knew that the sausage making of legislation would mean that there will be many concessions and compromises at the legislative level and so having a public discourse and discussion on the nature of the policy belies the fact that getting anything through has to run the gauntlet of the legislative process. And the legislative process is a negotiation between representatives not actually a democratic process, it’s a horse trading exercise.
  • Rahm Emanuel’s line was ‘we’re gonna be ordering a sausage to be made in the sausage factory and you’ve ordered a big sausage!’
  • Obama hired Katherine Sibelius. It’s critical to have someone on the team who understands all the different policy options and the spectrum of options that could be put into practice.
  • Mitt Romney’s Individual Mandate (obligates every citizen to take person responsibility by getting a healthcare plan, and those who don’t have one can select a government funded plan) in Massachusetts.
  • This model included the creation of a marketplace for healthcare plans. Citizens could choose the plan they wanted and it would also include a clause that prevented targeting on the basis of pre-existing conditions.
  • Obama was for Medicare for all. He makes a ridiculous argument that Canada had started with Medicare “from scratch” (…in Saskatchewan in 1962 and Federally in 1965? Canada was founded in 1867, dude) but in Obama’s mind the US was not starting from scratch…it would be hugely disruptive economically, for the insurance infrastructure so Rahm Emanuel worked with Romney to line up the democratic votes and to poach a few Republicans onboard.
  • RomneyCare was a huge success?! Romney’s model would work. So, Obama began to copy that plan in order to get signature legislation through.

Pandemic Crisis with the H1N1 Swine Flu Virus

  • H1N1 hit the US under Obama’s administration in 2009 and he tapped Katherine Sibelius to lead the effort. Obama’s team was warned by the Gerald Ford retirees that they should not act too swiftly and rely on the vaccine since it could actually cause neurological harm if rushed. More people were harmed by the vaccine then the swine flu during the Ford administration.
  • But there was clearly a fear as this H1N1 was spreading to several schools and locations in the US. And the 1918 Spanish influenza which was spread to about 1 billion people and killed 50 to 100M people with the result that babies in utero develop permanent disabilities which included getting the lower standards of living, lower socioeconomic status as a result of contracting the flu in utero.
  • 12,000 people died of H1N1 and obviously comorbidities are a big factor in the US. But at any rate, Obama was lucky the virus was quick acting, showing symptoms as it spread! Obama considered closing down schools but decided against it. The virus was not contagious and did not spread across the entire population and was quarantined out of existence.

The Supreme Court is Partisan Due to a Vague Constitution, Unlike Most US Laws

Marbury v. Madison gave the Supreme Court supremacy over the constitution. Major social issues are routed through the Supreme Court as a result. Terminology within the constitution is so vaguely described that you can have competing interpretations of values and interpret the constitution to back your values. In fact, we know that the founders had competing views and values at the time of writing it and therefore the ‘founders intent’ narrative is a very weak argument.

Obama had to replace Souter and had met many ‘high IQ morons’ in academia and otherwise so he opted for Sonia Sotomayor who was born into a lower middle class Portuguese family in the Bronx.

Obama Ridicules the Left Who Will Never Have To Pass A Law

  • The healthcare negotiations were snapped back and forth by capitulations as perceived by anyone on the left who would never have to deal with actually getting bills passed without a Filibuster and therefore were very “Weimar Republic-esq” in their inability to reason out concessions legislatively but skilled at appealing to the masses (ie. as a parliamentarians, you could grandstand in the legislature and never have to pass a bill during the Weimar Republic, and thus it was a very weak form of democracy that failed to cultivate effective leaders, arguably leading to the rise of Adolf Hitler…this is just a theory from the likes of Niall Ferguson etc).
  • These progressive folks could talk about aspirations because they never had to cut a deal. They talked of railroading legislation as if that was even feasible legislatively.
  • Anyway, Obama points out the biggest problem with the doctors was that they basically could still charge whatever they felt necessary. And that patients would see a drug ad on tv and still want that drug even if it was deemed a marketing scheme by a bell-curved scientific review. So, Obama pushed for a committee to set prices. The Cadillac benefits was another problem because there were these expensive plans that didn’t really effect outcomes but were highly sought after. Union leaders didn’t trust that any saving would go to their members. And they knew they would catch flack about changes.
  • Axelrod took Obama aside and said, people who already have healthcare were skeptical of any reform as additive of their care. Maybe we should back off healthcare….

Since Politics is Emotional, Comments on Race Explode Quickly, Sensationally and Crowdout Substantive Policy Discussions

Harvard professor Henry Gates was interrogated by a police officer for seemingly breaking into his own home, so Gates branded the office a racist. Obama quietly believed that Gates had not shown respect. Cussing out a cop. Obama used to get followed around by security guards. If you were followed, it was not a matter of paranoia, in Obama’s estimation.

4 minutes out of a 60 minutes discussion on healthcare police was all the media covered, and that 4 minutes comprised of Obama saying that the police acted ‘stupidly’. This is an example of a politician’s intentions begin warped for political points.

Stupidly does not equal stupid in reference to Sgt Crowley, according to Obama. Both Gates and Crowley overreacted. So, a beer summit was done to close off the issue. Again, more sensational than anything, Obama was proposing on healthcare and this incident was what sold newspapers.

Obama was truly always navigating in the White House. He gave his white counter parties the benefit of the doubt on any sensitive race issues.

On Healthcare, Obama was hopeful that 2009 would be the signature year. Maybe by August? But Republicans had other plans, Boehner through Frank Luntz coined the term “government takeover of healthcare.” Grassly would just stall and stall. Never coming up with a compromise bill.

Have a Townhall, sure, but the Media will not Pay Attention Unless there is Blue Meat (engineered controversy) or Red Meat (actual controversy)

The Tea Party had angry protesters outside an Obama event. This new NOPE movement was led by people like Ron Paul who was calling for withdrawal from NATO and end to the Fed.

Tea Party mobilized narratives around death panels, benefiting illegal immigrants, the birther movement (i.e that Obama was born in Kenya and ineligible to be president was at least in part racism.) The fact is the thought that the president of the United States was not even an American citizen was just too juicy a story not to cover it. The news media was selling lots of papers with Donald Trump playing up the possibility that Obama was not legitimate. Threading the needle between a) a legitimate concern about a person’s place of birth, b) implied racism. If it 10% racism and 90% a legitimate concern or vice versa, the fact is that was more interesting than public policy. Trump, himself didn’t have to believe it in order be leading in the Republican New Hampshire primary in 2011…And Obama’s team knew that white voters don’t like lectures on racism so the Obama White House was silent on the matter. Finally, Obama made a statement once he released his long-form birth certificate, but he was ultimately unable to capture the media’s attention when it came to his policy.

“The paid media is not the ideal conduit to discuss your policy options as a citizen…” – Professor Nerdster

Never Call Your Opponent Racist, That’s a Common Default Assumption

Obama’s position is that you should never complain about voters. The white predecessors. Whatever truths you might have, there are competing viable explanations about intentions of separate individuals. Obama was not going to win by labelling his opponents racist. State rights versus ending Jim Crow / culture, it’s just not going to get you very far, in Obama’s estimation.

Horse Trading on the Affordable Care Act

  • Obama was no LBJ…Efforts to placate Chuck Grassley were fruitless. Finally, Obama was asked ‘If we met everyone of your five new complaints about the bill would you support it?’ Chuck Grassley paused and said “I guess not.” Rahm Emanuel was being a bitch as usual said, “Well, we should have pushed for a slimmed down bill that a few Republicans could accept!”
  • All the evidence showed the Republicans did not want to cooperate, however.
  • Obama has always felt lucky….
  • He had to explain broadly and intricately the Afford Care Act, discuss what the risk corridors are and the Excel file full of formulas and options. He needed to “fight cynicism.” Obama decided to do a TV presentation on the subject. 1 hour of the reform proposal and the time was now.
  • Obama was able to get the healthcare bill kicked out of committee. On November 7th, 2009, Pelosi needed to make sure the bill wasn’t going to fizzle. Senators had lots of requirements, there were hold outs seeking horse trades. Liberals had no problem taxing pharmaceuticals but when a company was based in their jurisdiction, individual members demanded a reduced tax rate for their donors, ie a carve out. Hypocritical!
  • Harry Reid basically sorted out the deal.
  • Senate pork barrel deals were abound.
  • Unlike LBJ, the discussions hit the press core.
  • Obama stripped the public option out, arguing the government option being removed would pave the way to get better options through later, senate didn’t support that now.
  • Joe Lieberman was an independent but had supported McCain in 2008 but Obama let him keep his committee jobs because Obama knew he needed Lieberman’s vote.
  • McConnell threatened anyone who broke ranks either with a primary challenger OR be removed from committee assignments…
  • On December 24th, 2009, they got it through the senate but then Scott Brown won in Massachusetts. Obama blames Coakley for being a bad campaigner in that race, i.e. not a reflection of the public view of Obama.
  • Senators think all congress men are ill informed and congressman think senators are bloated and ineffectual, according to Obama, they’re both right!
  • Rahm was starting to vent about Obama’s healthcare strategy to the media and the resulting ‘scaled back strategy.’ Rahm was prepared to resign over his criticism that appeared in the major papers. But Obama said, ‘go pass the goddamn healthcare bill.’

When in Doubt, Split the Bill into Acceptable Components

So now with 59 votes in the senate, he wouldn’t get it through without a filibuster. There was another path which was Budget reconciliation; and to split the bill and pass a separate bill, had to scrap the 50 state healthcare markets instead of a national one, however.

Republicans Opposed Obama – January 29th, 2010

Republican didn’t know what was in the bill but were simply anti-Obama. But it basically emboldened the democratic healthcare bill. The press ran out of the things to talk about on the Affordable Care Act…Is it more important to get and stay elected or be courageous? Getting elected since you can’t effect change from outside.

On March 21, 2010, could have a last minute switch back by some legislators, but it was going to be passed. This law better work since Obama would be owning the healthcare system. Yeas and Nays, 216 passed. It’s done! Promise fulfilled.

Military Industrial Complex

  • The world as it is…Obama had to write letters to the families of the fallen. In Iraq, the government was split between Sunni, Kurdish and Shia; but the new regime was not willing to compromise on their ethnic dominance.
  • Afghanistan security forces needed to be trained. McCrystal asked that the White House give $1B for every additional 1,000 troops in Afghanistan. Bob Gates wanted an additional 10,000 troops. ‘We have the highest military count’ Obama was complaining that his staff should stop telling me the military sources had leaked the story. Working the press behind the scenes.
  • The 9/11 era sought to avoid congress being held responsible, need to get the country safe, shifting power to the Pentagon. Civil control of policy making was in question.
  • Afghanistan Pentagon advocates sought “$30B per year” McCrystal’s argument was to ‘give the troops a chance to succeed.’ Taliban was basically infused into the country. Afghanistan was not like Iraq; the military wasn’t optimized to solve the political difficulty; they were dependent on US support. 30K new troops, and the Canadians and Dutch wanted to leave. More of a surge than a withdrawal. They had a time table as well but Karzai didn’t feel obligated to transition based on that timetable.
  • Nobel Prize for Obama…that was a major shock. The prize was a call to action, shrinking ethnic divides, climate change. However, Obama was beginning to see a widening gap between expectations and the reality of his presidency.
  • There was another 20K troops; it was ideological, the Pentagon had a habit of getting enablers NOT included to the troops’ numbers. The Pentagon was basically trying to convince Obama to accept; December 1st Obama sent more troops to Afghanistan in order to protect the peace. War is contradiction.

“Cleared-eyed, we can understand that there will be war, and still strive for peace.” – Nobel Peace Prize acceptance speech 2009

Cookie Cutter Speeches

Obama international speeches to small countries he visited has a simple template he followed. Just as individuals want to be respected so too do nations. The template was simple: [greeting in native language] great to be in this country that has brought so much to the world [insert list of accomplishments]…[US and x country summary of relations]….[How the US has been shaped by immigrants from that country]…[Closing poetics].

Iranian Relations

1951 Iran nationalized oil and British was not happy so the British convinced Eisenhower that Iran was leaning towards USSR and should therefore institute the ’53 coup…commercial interests mixed with national interests were at play when it came to oil production. Then the Shah did a horrible job and in 1979, the Ayatollah arrives from Paris. Why were they chanting “death to America!” The fact that Iraq went to war with Iran and Iran used terrorist tactics to destabilize and attempt to overthrow other regimes using US sold weapons showed the tangle web. Hezbollah and Iran were a headache. Iran had nuclear facilities at the time of the Shah; but they could produce a bomb and prevent US intervention without risking a nuclear retaliation on Israel.

Obama’s Approach with Iran was:

  1. Step up a handshake for an open dialogue, Iran was happy to give the middle finger; Iran’s Green Movement and the crackdown meant the leadership was in trouble.
  2. Peaceful passive approach; US and Iran; Obama had less influence over that.
  3. Tough Sanctions on Iran P5+1 (Germany), Iran would basically string along negotiations in order to prevent the sanctions however.

Putin was not interested in the new Russia and applied soft authoritarianiansism he was genuinely popular and wanted to escape the humiliation of the USSR collapse.

Obama’s visit to China was interesting because a lot of these remarks from both the students and the Premier were prepare or vetted in advance. The Chinese insisted that they are still developing country, those living outside grill areas were below the poverty line relative to American citizens. Concerns about the South China Sea and Iran sanctions were his primary focus.

Climate Change Views of Obama In a Nutshell

  • Obama’s views on climate change were informed mostly by his mother who lived in Indonesia and had, as an anthropologist, had other preoccupations such as starvation, jobs and so pollution was a post materialist concern, well after jobs are secured.
  • Obamas daughter was concerned about tigers and deforestation however the primary concern was that climate change would raise the oceans. Increase the likelihood of more severe storms because there’s more urban centres to worry about but also more severe weather. Nixon launched the EPA, had to be mentioned.
  • Labour union leaders were against any kind of climate change measures that would hinder the union member jobs. And climate change is a really difficult problem to solve given that it’s short term pain for long term gains and partisans are only secured for four years terms. Bush ignored the reality of climate change. Doing so would lead to a challenge from the right which denied its existence.
  • Obama supported a cap and trade model; emphasized oil and gas production, but was happy to support ethanol in the swing states. Acknowledging that he can’t lose Ohio and Pennsylvania in 2012! Ambitious but realistic goals. Obama was concerned about coastal town flooding. Solar panels and windmills were still rare in 2009 and depended on whether the sun will shine or the wind would blow. The economy was built around resource extraction and oil and gas.
  • The best laid entrepreneurial plans will lead to risks. Solindra failed by 2011, cheap Chinese manufacturers crushed it. Clean energy moon shots to combat climate change were long-term.
  • The Clean Air Act 2003 was a step forward but Bush’s EPA didn’t want to control exhaust from cars and refused to classify it as a pollution.
  • For Obama, regulatory policy actually helps make life more safe. For example, airline regulations make flying more safe. And clean water is more likely with regulations. But regulatory policy was always viewed as bad by the right. In part because it created government jobs? But also the red tape inhibited economic development so the thinking goes.
  • Case Sunstein: The benefits of regulation outweighed the costs. Automakers accepted national standards, The auto-bailout (never mentioned bailouts) when they accepted the new standards.
  • Obama had collaborated with McCain quickly after his election defeat recently on environmental policy but as soon as that was released to the press, McCain received a threat from his right flank if he continued to work with Obama so he had to withdraw or risk losing his senate seat.
  • Congress was unhappy about these centrists. Senate is where good ideas go to die. Cap and Trade: companies that exceed have to pay a fee. They would support it even if Bush senior had a cap and trade policy but not if Obama proposed it. Getting a congress environmental bill before December was not realistic. Not enough runway to land this bill.
  • Brazil ‘92 Earth Summit, Kyoto Protocol had a cap and trade function. Kyoto was mothballed by Bill Clinton in 1997.
  • Lindsay Graham was media savvy but a double crosser on bills such as climate change legislation.

Common Differentiated Measures

Common differentiated meant that rich countries that had higher emissions standards could achieve greater reductions but were also the bearers of most of the costs in fighting climate change (even if it was through pollution that these countries prospered, it was a tough sell). China and India didn’t have to work by the same rules. Measures that Obama wanted to improve upon:

  1. Self-determined; wealth energy profile and would be revised
  2. Measures to verify
  3. Wealthy countries would help developing countries

Ban Ki-moon was not a social guy. Copenhagen Summit: treaty was held up. Chinese and BRICS were not supportive. It was already looking like an eminent failure, as Obama crossed the Atlantic: Obama was self-aware that his carbon footprint was wacky high (not necessarily hypocritical since it’s a broad policy aspirations). Rasmussen was the Dutch PM but was ignored at the summit.

Copenhagen – Cornering Your Negotiation Opponents

  • When the Chinese delegation went up to hold a separate meeting with Brazil and India, Obama burst into their meeting. They were all shocked…Their view was that Kyoto is fine, the West was responsible, national sovereignty concerns trump the environment.
  • Obama said they were holding it up, try telling the people downstairs what you were doing, that the poor countries would be losing funds from the US. The US was going to provide aid to these other countries to be environmentally sustainable, and these developing counties and big polluters were holding things up….Obama pushed it through.

Into the Barrel Stories

The negative stories if they aren’t broken up by global news stories or other distractions build up a negative perception and then opposition grows built up around that perception further. Then you get thrown over the Niagara Falls, according to Obama. The press was more critical;

Cabinet and staff would prevent leaks. There were no ethical lapses during Obama’s two terms. Dr. No (if it sounds fun you can’t go to that event)….

Women in the White House

Obama didn’t perceive much gender bias until he had a meeting with female White House staff. It was good to air things out. These women did not feel that they were being respected. The towel snapping was not something these women understood and appreciated ie. male networks of influence. Obama’s view was that no one was respected in the White House, it was about ideas and forcefully arguing your point. Need to fight for your own voice. At any rate, he agreed to do better to accommodate female voices.

Wall Street Reigned In, Modestly

  • Congressional progressives were skeptical of all the human psyche with its ups and downs as well as the economy under capitalism with its ups and downs.
  • But Obama’s primary goal was to stop financial crises; reinstating Glass Steagall just didn’t make sense since this was not an issue of investment banking and retail banking overlap. The left believed that Wall Street was a trillion dollar casino. Based in quarterly earnings. The offshoring of the jobs and the retaliation of regulating finance was not going far enough. Limiting the size of banks was another idea; but that was an idea that didn’t work for Obama. It was not necessarily mega banks that were the problem. Cutting the banking sectors size didn’t really make sense. Euro has a lot of big banks, for example, in Obama’s rationale.
  • Obama’s mandate for change was not strong enough because he had held off the worst of the crisis. But what he did institute was:
  • – More capital liquidity requirement:
    – Derivatives intensified; used to hedge their risk;
    – Needed better risk management;
  • Elizabeth Warren created the consumer protection project. Harry Reid put her in the Banking, Housing & Urban Affairs committee. She was a grandstander to the point of dishonesty but Obama understood that she was playing to the crowd in committee.
  • Chris Dodd was long a legislative animal. While a colleague makes an impassioned plea and then in backroom deals taking the exact opposite stance, Dodd turned to Obama and asked “You didn’t think this was ever on the level? Did you?”
  • The House could pass the bill but they would need a Democratic senate needed every vote. Had to serve the conservative Democrats. Regulation happy Democrats were afraid to go after any of the major banks. Politicians who were complaining about special deals being carved out for healthcare reform, now wanted to carve out special deals for whatever they could get for their constituents.

Obama consistently feels like the fisherman from Old Man & the Sea with the sharks eating the tuna as he brings it home.

  1. Increased transparency on Senior Leader Team compensation;
  2. Consumer protections;
  3. Clawback mechanisms for questionable practices.

Mostly came through intact. Amendments didn’t nip away much. July 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. It had compromised: fairer consumer protections. Dodd-Frank is now possibly going to be adjusted, with reduced regulation. Promise fulfilled.

Deepwater Horizon, Gulf of Mexico Oil Spill

  • April 20th, 2010, it was a space agency-caliber problem; the underwater leak was almost impossible to clog.
  • Politically, the oil spill was right in the middle of negotiations on Climate Change legislation in which a concession had been made for Republican support in exchange for regulatory loosening of the offshore drilling protocols. Therefore, Climate Change legislation was killed off after this accident.
  • British Persian petroleum in the 1950s had spurred the coup in Iran. Beyond Petroleum now had a real time camera of the underwater leakage that outraged the world.
  • Jindal was making a political play around building a marsh so that he would look like he was doing something as governor of Louisiana.
  • Hurricane Katrina was a mess, quick to respond, most of the victims were black. Couldn’t relocate because they didn’t have a car.
  • This new crisis was going to hurt Obama

Obama v. Carville

Carville (Bill Clinton’s 1992 campaign manager) basically blasted Obama for not doing enough with this crisis. The truth was Obama couldn’t plug the hole himself…”What am I supposed to dive down with a wrench myself?” Obama wanted to blast the American public by saying that this spill is partly due to 30 years of Republican idea that the regulation was the problem. BP didn’t have the tools on hand because they calculated a spill was unlikely and wanted to save money. That people didn’t want to pay taxes, Jindal tried to score a point while he was an oil industry insider, that Americans love their cars and cheap gas more than they do the environment. Boring to talk about environmental goals and or would be seen as boring, that Americans just wanted this issue to go away so they could feel less guilty about polluting as usual.

Axelrod needed a break and Rahm decides to run for Mayor of Chicago. So they both quit.

The Republicans were tasting blood. They wanted to block the Repeal of don’t ask don’t tell, needed to muster 60 votes for a bunch of other items. McConnell had a tax cut bill while Warren Buffett pays less than his Secretary proportionally or in fact in absolute terms if other entities for which Warren Buffett pay the taxes on his behalf…tax law is complicated. Bush tax cuts were happy, doctors and lawyers don’t think their own taxes should go up. Anyone making more than 200K are rich. Obama would need to compromise.

Any increases in taxes would be harmful to get that through Obama’s agenda.

Extending the Tax Cuts

Joe Biden negotiated McConnell legislation. McConnell said the only thing he ‘wanted to do was make sure Obama was a one term president.’ Joe Biden was a better negotiator. December 6th 2010 got the concession for his bills in exchange for extending the tax cuts for another 2 years. The idea was that McConnell was betting Obama would lose in 2012 and Obama was betting he would be able to reform in 2012. The worry was that the Bush tax cuts would be made permanent. Bill Clinton had a “reasonable centrist” view to get the détente.

Michelle was doing a good safety bill. 3 ½ weeks of Christmas, had to posse for the secret service staff photos.

The Dream Act: the American children of illegal immigrants worried so much that they would need to self-deport or be deported without notice,
Don’t Ask Don’t Tell: Obama was not enlightened as a kid but his views changed overtime. The discrimination of the LGBTQ community, changed his view.
Opponents of Repeal: Obama didn’t want to do an executive authorization. Marine corp. didn’t really have a problem with being gay. The idea that these folks can’t fit in is a weak argument in Obama’s view.
DACA militarized: creating border crossing cartels. And most folks overstayed flight entry visas. 11M people in the US were believed to be illegal immigrants.
Border Enforcement: Obama didn’t want to reverse the immigration reform and then be accused of being weak on border laws.

The Dreamers Act DACA

  • Smart kids who didn’t take the country for granted, is how Obama characterizes the Dreamers. Harry Reid called the dreamer act critical. Claire McCaskill explained that “if I support this I would lose my job.” They had the DACA vote, but were 5 votes short, it didn’t pass. But Claire said she had to vote Yea. She just couldn’t look up at the gallery at the kids in attendance and vote Nay.
  • Lame duck session in the house was surprisingly productive. 25% of the legislative was done in that one one month. Democracy was normal again for December 2010.
  • Obama owed his foreign policy stability to the dictatorships. Terrorist attacks had been narrowly evaded by the dictatorship interventions at the last moment, yeah right! Planted by the dictatorship (reverse causation). Suppress press, police state.

The Betrayal of Mubarak

  • He had a genocide human rights lawyer named Samantha Power who ha an inverted neo-liberal opinion by advocating punishing countries who engage in genocide, when Obama wanted to abide by state sovereignty. The Armenian genocide and announcing it was blocked because Obama was in negotiations with the Turkish government to support Iraqi withdraw. Same with Mubarak Egypt…As Tahrir Square took off, the US press demanded Obama take a stand.
  • Mubarak said they were an emotional people that would cause a huge regime. Obama got Mubarak on the phone, trying to get Mubarak to retire into the sunset and Mubarak said “you don’t know the Egyptian people, they are very emotional!” Obama then publicly sided with the protesters. Counter-protests happened. US journalists were assaulted. Without intervention, subsequent protests were met with extreme violence to prevent any kind of public political protest resulting in likely repression in places like Bahrain and Iraq.

The Thing About the UN

Syria had Russian support while the public protests were occurring. Therefore, the UN veto is another political body that blocks doing the “right thing.”

Qadaffi in Libya

Somalia Black Hawk Down (1993) was fresh in the minds therefore boots on the ground was not feasible. Libya was using ground forces to clear out (kill) citizens house by house in territories now ruled by competing factions. The consequences of intervening were significant. Obama led with intervention and so other regimes would quell protests much earlier in their cycle to prevent a potential US intervention.

Osama Bin Laden Execution Was Well Planned

Joe Biden was hesitant to proceed with the raid on the Abbottabad Compound. Obama weighed the probability that the tall man walking in circles in the courtyard was Bin Laden…Obama instincts were good…He got Bin Laden which was a rare bi-partisan victory...

Book 2 is likely coming in a year or two….more to come then….